- The dollar had a strong bullish day on Wednesday after Trump won the election.
- Market participants are preparing for a rate cut during the FOMC policy meeting.
- The US reported an increase of 12,000 jobs in October.
The EUR/USD outlook shows the euro recovering after hitting new lows on Wednesday’s Trump trade. Market participants paused the recent move ahead of the FOMC policy meeting, where the Fed is likely to cut borrowing costs.
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The dollar had a strong bullish day on Wednesday after Trump won re-election as US president. Trump’s trade continued with enthusiasm as markets awaited cuts in taxes and tariffs on imported goods. At the same time, a Trump presidency is likely to complicate the Fed’s rate-cutting cycle. After the results, traders reduced the probability of a rate cut in December from 77% to 67%.
Meanwhile, market participants are bracing for a rate cut during the FOMC’s policy meeting later today. While the U.S. central bank is likely to cut rates, it will be less than traders expected a few weeks ago. The Fed kicked off its rate-cutting cycle with a super-major rate cut, raising expectations for another such move in November. However, economic resilience has changed this outlook.
Still, the latest jobs report revealed unexpected weakness in the labor market that could spook policymakers. Economists had expected slower job growth due to the recent hurricanes. However, the increase of 12,000 jobs was well below estimates. A more dovish tone during the meeting will increase the likelihood of a rate cut in December. On the other hand, if policymakers show caution, rate cut bets will fall, further boosting the dollar.
EUR/USD key events today
- Claims for the unemployed
- Federal funds rate
- FOMC statement
- FOMC press conference
EUR/USD Technical Outlook: Bears take control after evening star pattern
From the technical side, EUR/USD the price paused its decline near the key psychological level of 1.0700. It is trading well below the 30-SMA, indicating that the bears are in the lead. At the same time, the RSI is trading near the oversold region, indicating strong bearish momentum.
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Initially, the bulls reversed the trend by breaking the 30-SMA and creating higher highs and lows. However, they failed to hold a step beyond the 1.0900 resistance. Here the bears took control of the price forming a strong evening star pattern that broke below the SMA. Given the firm bearish bias, the downtrend may resume soon with a break below 1.0700.
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